Large tax increase possible in Peters schools

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Taxpayers in Peters Township School District should strap in and expect a bumpy ride the next few months, as a slate of new board directors try to tackle a funding deficit and possible major tax increase.

Residents could be facing one of the largest property tax increases in the district’s history — more than 5 mills — if the district takes advantage of exceptions from the state Department of Education.

The issue will be discussed this evening at 6:30 during a meeting of the school board’s Finance Committee. And though the final details have yet to be determined before a June 30 final budget deadline, the committee’s leader says he doesn’t see a way to avoid a sizable tax hike.

“I think the likelihood of there being no tax increase is virtually zero,” said Jamison Hardy, a newly elected board member and chairman of the Finance Committee.

Early this year, the district passed a $56.97 million preliminary budget for the 2014-2015 school year that fell $1.6 million-$2 million short of anticipated revenues.

With rising costs associated with special education and retirement benefits, the school board asked for and was granted exceptions from the Education Department to raise taxes above a state-imposed limit. That limit would have capped an increase at 2.1 percent — equivalent to about 2.14 mills. But the Department granted the district a waiver to increase taxes another 3 mills due to $1.2 million in additional retirement and special education costs. That means the district could conceivably raise taxes by as much as 5.14 mills, though school directors are hoping that won’t be necessary.

“Even with 5 mills [increase] we have a $750,000 deficit,” Mr. Hardy said. “We did have some substantial savings but it’s still in the negatives.”

The district was able to relieve some expenses due to teacher retirements, but not enough to stave off a deficit, Mr. Hardy said.

“There’s still going to be a deficit in the hundreds of thousands of dollars,” he said.

The district has little control over most of the major cost drivers this year, including a 25 percent increase in expenses related to staffing, special education and debt service.

Staffing costs are expected to rise by more than $3.3 million next year due to mandated staff and contractual obligations.

The district has maintained one of the lowest per-pupil costs in the state at $11,203 per student — ranking 461 out of 500 districts statewide.

At the same time, the district has had a slow but steady decrease in enrollment in recent years, with a loss of 161 students districtwide since 2010.

By 2021, administrators projected the district would lose about 45 more students, depending on growth in the township, which is about 65 percent developed.

Retirement costs are among the biggest factors in the budget, predicted to rise to more than $3.1 million next year — an increase of $680,648 from this year.

The district's retirement contribution will continue to increase to as much as $5.3 million by 2021.

The pension liability crisis has been felt statewide, with dramatic increases due to market losses and contributions that were too low in previous years.

Other increases are expected for cyber school tuition, along with an additional $100,000 for a new math curriculum and increased transportation costs of 3.26 percent, or $28,000.

The district pays about $450,000 per year to educate more than 70 cyber school students, and that number is expected to increase next year by about $100,000, based on continued cyber school enrollment increases.

Home districts are obligated to pay cyber school tuition for students, minus costs for items such as transportation.

Health care costs are projected to increase by about 2.5 percent next year, and special education costs continue to rise while state subsidies have remained flat.

The current property tax rate is 102 mills, the second lowest among school districts in Washington County. Each mill generates about $335,000 for district coffers.

A 5-mill increase would impact the typical property owner with an increase of about $160 per year. With 7,697 residential parcels in Peters, the median assessed value is $31,041, according to the county’s chief assessor, Brad Boni. Though new homes are obviously worth quite a bit more in market value, the county must assess properties using values from 1981 — the last time a reassessment took place. There is a reassessment underway now, but it isn’t expected to be completed for about another year.

The typical homeowner pays about $3,166 in annual property taxes now, and that amount would increase to $3,325 with a 5-mill increase.

The committee this evening also is expected to begin tackling ways to fund capital improvements. The board is expected to vote on a final budget in late June.

More information about the budget is available online at www.ptsd.k12.pa.us.

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